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The ethics of shareholder value: duty, rights and football

Donald Nordberg

Westminster Business School

Westminster Business School, University of Westminster

Working Paper Series in Business and Management Working Paper 11-3 June 2011

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WORKING PAPER SERIES IN BUSINESS AND MANAGEMENT

WORKING PAPER 11-3 June 2011

The ethics of shareholder value: Duty, rights and football

Donald Nordberg University of Westminster

Correspondence Donald Nordberg ([email protected]) Westminster Business School University of Westminster 35 Marylebone Road London NW1 5LS, UK

ISBN ONLINE 978-1-908440-02-0

WESTMINSTER WORKING PAPER SERIES IN BUSINESS AND MANAGEMENT, PAPER 11-3

The ethics of shareholder value: Duty, rights & football

Donald Nordberg Westminster Business School, University of Westminster

Abstract

How does a board of directors decide what is right? The contest over this question is

frequently framed as a debate between shareholder value and stakeholder rights,

between a utilitarian view of the ethics of corporate governance and a deontological

one. This paper uses a case study with special circumstances that allow us to

examine the conflict between shareholder value and other bases on which a board

can act. In the autumn of 2010 the board of Liverpool Football Club sold the company

to another investing group against the wishes of the owners. The analysis suggests

the board saw more than one type of utility on which to base its decision and that one

version resonated with perceived duties to stakeholders. This alignment of outcomes

of strategic value with duties contrasted with the utility of shareholder value. While

there are reasons to be cautious in generalizing, the case further suggests reasons

why boards may reject shareholder value in opposition to mainstream notions of

corporate governance, without rejecting utility as a base of their decisions.

Keywords: Corporate governance, Boards, Ethics, Pragmatism, Shareholder value, Liverpool FC.

Introduction

In 2010 a strange event occurred in a corner of the world of corporate governance:

The board of directors of a sizeable enterprise in the UK fired the owners. The event

attracted wide coverage in the news media, providing a rare public glimpse into

The ethics of shareholder value 1 WESTMINSTER WORKING PAPER SERIES IN BUSINESS AND MANAGEMENT, PAPER 11-3

corporate governance operating in the raw. What the incident revealed made

intriguing reading for sports fans around the world, throwing up a cast of characters

with heroes and villains, a real-life boardroom soap opera, the modern-day

equivalent of a morality play. But the lessons we can draw from it, about the ethics of

corporate governance and the role of company directors are larger and more

nuanced. Liverpool Football Club got new owners and hope for salvation from a

forced descent from the English .

Away from the hype of the headlines, a more mundane set of concerns arise: The

incident suggests that directors do not, in practice, or at least in this case, put their

allegiance to shareholders above all. The case raises questions about the nature of

shareholder value, which lies at the heart of much of the academic literature and

public-policy debate over corporate governance around the world during the past

several decades. It offers a rare chance to analyze a key issue, how in practice

directors see their governance role, in quite a pure form, through a case that strips

away much of the messy complexity of public corporations and various categories of

institutional investors and focuses attention instead on the relationship between

boards and owners. At work in this case is a different logic, a different ethic, from the

one prescribed in much of the literature on corporate governance, one with

implications for how business people use ethics to inform their judgements.

This essay considers first the background of the case and the corporate governance

issues it raises and then reviews what the literature tells us about the role of boards

and owners. It considers how longstanding debates in ethics give shape to the work

of boards of directors, independently of law and regulation, and how in particular

utilitarian approaches to board ethics have clashed with duty-based perspectives.

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The evaluation of the case suggests that in practice the board of this company chose

what it felt was the "right thing to do" once the duty and utility became aligned in

purpose, a purpose that remained at variance with notions of shareholder value that

lie at the heart of many normative views of corporate governance. It concludes with

observations about the limitations of generalizing from this case to the wider world of

corporations, but also with reasons why this pure case resembles closely the model

of corporate governance that the mainstream literature describes.

Ownership of Liverpool FC

As it entered the 2010-11 season Liverpool FC had won 18 championships in the top

English football league – tied with its arch rival Manchester United for the lead – but

none in the last 20 years despite regularly finishing in the top four and competing in

the top European club competition. The case was widely chronicled in the UK press

and in statements from the club itself (e.g. Eaton, 2010a, 2010b; Gibson, 2010;

Liverpool FC, 2010; R. Smith, 2010; S. Smith, 2010). In February 2007, the club

came under the ownership of two American investors, Tom Hicks and George Gillett,

in a deal that valued the club at £219 million. Hicks, a venture capitalist, had

experience of sports franchises; Gillett owned the hockey team.

Together they promised to revive Liverpool FC with investment in a new stadium and

in players to secure its place at the very top of English football. The financing method

they adopted was similar to their experience in managing other sports franchises:

borrow money on the promise of future revenue streams and maximize the yield to

shareholders by keeping equity investment to a minimum.

made the loans to finance the deal.

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The two owners soon fell out with each other, leaving the club without direction or the

planned further investment, just as the global financial crisis swept RBS into its

maelstrom. Performance on the pitch was good but not great, and the club found it

difficult to compete for new talent against rivals like Chelsea, Real Madrid and latterly

Manchester City, with seemingly unlimited funds available from wealthy owners who

cared little if not at all about the cost. By the autumn of 2010, with the loans coming

due for repayment and RBS unwilling, perhaps even unable to extend the term, the

club teetered on the brink of slipping into administration, a form of bankruptcy. The

board tried to negotiate the sale of the club to a series of other investors, without

success. The turmoil unsettled the team. Seven games into the new season,

Liverpool sank to near the bottom of the Premier League, having won only one match

and gained only six points. Under league rules, Liverpool FC would have nine points

deducted if it went into administration. That would give it a total for the season to-

date of minus three, making the threat of relegation next season to the second tier of

teams palpable. If that happened, the club would lose tens of millions of pounds in

television revenues; key players seemed certain to leave even before that. This path

would clearly be bad for the club, bad for the supporters, and probably bad for

football. Fans assailed the owners for their actions and inactions, for betraying the

proud traditions of the club – their club, the fans' club.

The board felt urgent action was needed. After various suitors pulled out of proposed

deals, the board was left with a decision: the most viable alternative to administration

was to sell the club to another American sports investor, John Henry, through his

company, New England Sports Ventures. But there was a catch: Henry's offer, worth

about £300 million, was sufficient only to pay off the debt and accrued interest on the

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loans to RBS. Hicks and Gillett would receive next to nothing. By a vote of 3-2 the

board approved the sale of the club to Henry. The dissenting votes were from Hicks

and Gillett.

Hicks and Gillett then sought to have two board members removed and replaced with

their own associates. The chairman , who was also chairman of a

major listed company, argued that he had joined the Liverpool FC board on explicit

written agreement that he should try to find a buyer. Christian Purslow, managing

director, joined the board to put the club's finances in order. Moreover, Broughton

insisted that he and only he could remove members of the board. Hicks and Gillett

took their case to court. They lost in a ruling by the High Court in London, which ruled

that the board did have the right to sell the club. They then sought and gained an

injunction to block the sale from a court in , Texas, with somewhat tenuous

jurisdictional grounds, before losing again in London before the Dallas court backed

down. The deal was forced through over the continuing objection of the owners.

Henry took control of the club, though Hicks and Gillett immediately threatened to

sue the other three directors personally for breach of trust. Still, the fans won, and

arguably football won. Hicks and Gillett had lost.

The courts no doubt considered the finer points in property rights and contract law in

reaching their conclusions, and what company law says about the obligations of

directors. The board no doubt took legal advice before voting to disenfranchise the

owners, for the sake of minimizing the danger that another court might find the

directors in wilful disregard of the law. But law is only an approximation of ethics, the

attempt by society to settle what is right with a degree of fairness to all. The decision

to go against the express wishes of the owners they were meant to serve raises

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issues of ethics that underpin, often in an unspoken way, the field of corporate

governance.

Corporate governance, in theory and practice

Much of the literature on corporate governance has taken the view that the purpose

of boards is to ensure the company strives to achieve shareholder value. Under

agency theory, managers, the "agents", are assumed to act in their own interest,

which may diverge substantially from those of shareholders, the "principals"

(Eisenhardt, 1989; Fama, 1980; Fama & Jensen, 1983). This theoretical approach

views the board of directors as the shareholders' intermediary. Shareholders elect

boards to monitor the performance of managers at closer hand than shareholders

could do on their own. In this view, boards may represent another level of agency

relationship to their principals, but one, if properly structured, less likely to show

conflicts of interest with the principals and thus help to overcome the agency problem

(Jensen & Meckling, 1976). The ethical assumption is this: Agents should act in

accordance with the interests of owners, so the corporate governance imperative is

to align the utility of boards and owners. In practice boards' primary roles are 1) to

structure pay for managers that align their interests with those of shareholders and

then 2) to monitor performance against targets. Discussions of the agency problem

are often couched in terms of behavioural economics: They assume that "economic

man", as a non-ethical actor, will respond to incentives in a self-interested way. This

line of theory led to the growth of pay-for-performance and stock options in public

companies. While they represent an "agency cost" to shareholders, that cost is worth

incurring if performance enhances shareholder value even more. With growing

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theoretical justification (e.g. Rappaport, 1986), striving for shareholder value became

the main goal of enterprises and the defining purpose of boards.

Agency theory may dominate the literature on corporate governance, but it has its

critics who voice alternative interpretations of the role of boards. Proponents of

stakeholder theory (e.g. Donaldson & Preston, 1995; Freeman & Philips, 2002) see

boards as having duties that go beyond satisfying shareholders, reaching to all those

who have a legitimate interest in the enterprise, including suppliers, customers,

employees and others. In this view, the duty of directors is to assess the salience of

stakeholder interests (Suchman, 1995). Stakeholder theory can be seen as taking

two forms. In a weak form, boards should promote those stakeholder claims that also

contribute to the value of the enterprise, what Jensen (2001) calls enlightened value

maximization. A strong form of stakeholder theory, however, ascribes rights to

stakeholders, placing their interests on a par or even ahead of shareholder interests

(e.g. Crowther & Caliyurt, 2004). Freeman, whose early invocation of the term

stakeholder (1984) launched this stream of discussion, has since sought to reconcile

what he called the instrumental and normative forms of stakeholder theory (Freeman

& Philips, 2002).

Other doubts about the adequacy of agency theory have emerged as well.

Challenges come from the idea that directors have greater duties that monitoring

managers and controlling their behaviour. Empirical studies suggest that boards have

input to the strategy of enterprises (McNulty & Pettigrew, 1999; Pugliese, et al., 2009;

Pye & Pettigrew, 2006), even if their contribution is modest (Stiles, 2001). Directors

also facilitate access to scarce external resources (Hillman, Cannella, & Paetzold,

2000). These contributions sit uncomfortably in corporate governance models where

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the board's role is performance monitoring and control (Roberts, McNulty, & Stiles,

2005). Blair and Stout (1999) argue that boards serve as a mediating hierarchy to

resolve the contesting claims on a company's resources. Still others see in the

behaviour of directors and senior corporate officers a commitment to doing a good

job, an area known as stewardship theory (Davis, Schoorman, & Donaldson, 1997;

Muth & Donaldson, 1998). Its conclusions share with agency theory a focus on value

creation, often for shareholders, but like resource-dependency approaches they

reach conclusions about the "right thing to do" that are at odds with an agency-based

approach.

Most of the corporate governance literature focuses on relationships on larger listed

companies, with a large number of dispersed shareholders, where the agency

problem is seen as most acute. A second stream of the literature concerns large

owners who abuse their comparative power and expropriate corporate resources for

their own purposes at an agency cost to minority shareholders, a stream of argument

often focused on continental European companies, so many of which have

controlling "blockholders" (Enriques & Volpin, 2007; Laeven & Levine, 2008; Roe,

2003). Another stream looks at governance in private companies (e.g.

Bartholomeusz & Tanewski, 2006; Ng & Roberts, 2007), but that often focuses on

issues of succession planning in family businesses, rather than shareholder value

(Hillier & McColgan, 2009; Scholes, Wright, Westhead, & Bruining, 2010). That

literature, however, raises issues that go to the heart of this case, and by reflection

those of large listed companies as well: What happens when shareholders interests

are out of line with the interests of the business itself? The competing theories of

corporate governance raise questions about the ethical basis that directors take

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when deciding between competing claims. We turn now to a discussion of the ethical

principles that underlie these contesting approaches to corporate governance.

Ethics in corporate governance

A substantial literature sees corporate governance as a practical example of ethics in

action (Brickley, Smith, & Zimmerman, 2003; Martynov, 2009; McCall, 2002; Roberts,

2005, 2009; Rodriguez-Dominguez, Gallego-Alvarez, & Garcia-Sanchez, 2009;

Wieland, 2001; Zetzsche, 2007). The starting point is often that the agreement to

create a corporation is a decision based on perceived utility for the participants, so

utilitarian ethics hold sway. Echoing Bentham (1789/1904) and Mill (1863/1991), this

approach sees the greater good for the greatest number of shareholders as its

central principle. Agency theory, sometimes seen as taking an amoral stance, can be

viewed as being based on ethical egoism (Frankena, 1963), moderated through the

moral force of the invisible hand of markets (Zak, 2008). This view has resonances in

company law and theories of the firm as a nexus of contracts with the aim of

minimizing transaction costs (Coase, 1937; Williamson, 1988).

This view sits unhappily with many scholars of ethics, as a shortcoming of

utilitarianism and other consequentialist approaches yield problematic responses to

many of the moral questions that businesses face. Much of stakeholder theory,

particularly of the strong variety, is built on deontological assumptions of a priori

duties of boards to consider the broader impact of corporate decisions (Bowie, 1999;

Evan & Freeman, 1993; Freeman & Evan, 1990), rather than just the fabled "bottom

line".

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Various scholars have attempt to bridge the divide between duty-based and

consequentialist approaches. Hasnas (1998) argues for a consent-based view of

corporate governance, as it represent the common ground between shareholder- and

stakeholder-based approaches as well as with a social contract theory of the firm.

This, too, is unsatisfactory as the basis for the difficult decisions, however, when the

interests of shareholders and stakeholders polarize sharply, which is when boards

need to turn to ethics for guidance, cases where both law and codes of conduct tend

to be silent. Hendry (2001, p. 173) argues that business ethics scholars have failed to

make the case for a realistic version of stakeholder theory that would provide a

practical alternative to the shareholder perspective, concluding that "despite all the

talk of stakeholders, they have become increasingly marginal to the corporate

governance debate".

The divide is apparent when setting out the ethical approach that underpins the main

theories of corporate governance. Nordberg (2008) makes the case that another

consequentialist approach is possible, changing the frame of reference away from

stakeholder versus shareholder notions of the firm. He proposes instead a concept

called "strategic value", in which directors may adopt a utility-based approach,

calculating as best one can the value of the outcomes of their decisions, though not

with shareholder value or even an instrumental notion of stakeholder theory as its

focal point. In this ethical frame, directors focus on the consequences of decisions to

the value of the business, irrespective of the outcome for any stance any group of

shareholders might take. This is not quite what the UK law identifies as the

responsibility of directors, as it puts greater emphasis on the descriptive first part – to

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"promote the success of the company" – than on the normative second part – "for the

benefit of its members as a whole".

Still, shareholder value is a problematic notion, despite the mathematical formulation

advanced by Rappaport (1986) with its calculation of a return on capital largely

divorced from the interests of the people who provide it, locating the decisions of

boards as rational, economic ones, while ignoring the bounded nature of the

rationality that leads to them (Simon, 1955). This approach to value calculation

stands accused by think-tanks (e.g. Aspen Institute, 2009; Tonello, 2006), policy-

makers (e.g. Walker, 2009) and academics (e.g. Bebchuk, 2005) of fostering a short-

term approach to business decisions. The metric of "total shareholder return", the

sum of dividends and capital gains, seems simple enough to calculate until one

recognizes shareholders lack a common time horizon for their interests, even if those

interests were common (Admati & Pfleiderer, 2009; Edmans & Manso, 2009;

Nordberg, 2010).

Another approach draws upon the philosophical tradition of pragmatism to reconcile

competing claims of duty and utility. Hendry (2004) argues the case for a bimoral

approach to move beyond the shareholder-stakeholder views with their utilitarian and

deontological underpinnings. Hendry draws the view from Rorty (1989) that behind

American pragmatism sits an optimistic view that people "will use their freedom not

only to advent their self-interest but also to protect the common interest" (Hendry,

2004, pp. 149-150). Here the moral choice involves living with and reconciling

tensions between obligations and self-interest. Singer (2010) shares the view that

shareholder and stakeholder orientations split along deontological and

consequentialist grounds with a utility-based view for more instrumental approaches

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to stakeholders in the middle. He sees in the American pragmatist tradition of James,

Dewey and Peirce a way to reconcile the dilemma and work through the dialectic of

contesting ethical norms. He notes that Margolis (1998) called for pragmatic solutions

when empirical ambiguities arise. Margolis and Walsh (2003) see ambiguity as the

starting point of many strategic decisions, pointing towards a pragmatic basis for

decision-making weighing the balance of contending ethical frames.

With this frame of reference in mind we return to the case of Liverpool FC as its

directors voted to ignore the expressed wishes of the owners and sold the club out

from under them. What was the ethical basis for their decision, and what implications

might it have more generally for the work of corporate boards?

Ethics at Liverpool FC

To those interested in corporate governance, this case presents a remarkably simple

example of the issues that arise between owners and boards. First, it is a private

company, required under law to report only summary annual financial statements to

the authorities and only many months in arrears. It faces no obligation for continuous

disclosure of material information. However, in keeping with the practice of several

large football clubs in the UK, many of which were once listed on public equity

markets, Liverpool FC has been more forthcoming with disclosures than the law

requires. Second, when the case began, and stripping away the formalities of the

corporate entities that acted as intermediaries, there were only two shareholding

individuals, so discussions of its corporate governance need not deal with the

complexity of how the board could discern where the interests of shareholders lie.

Third, both shareholders were members of the board of directors, with direct access

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to all the information relevant to the board's decision. Neither the separation of

ownership and control nor the information asymmetries that complicate analysis of

corporate governance concerns in public companies apply.

The board voted by 3 to 2 to sell the club to New England Sport Ventures. Despite

their disagreements over seemingly everything else to do with the club, Hicks and

Gillett were united in their view that selling the club was a bad idea. The agency

problem described by many scholars of corporate governance (Fama, 1980; Fama &

Jensen, 1983; Kumar & Sivaramakrishnan, 2008) took on a rather different light.

Viewing the board and senior management of the club as agents of the owners, the

agency problem swells to extreme proportions: not only has the board appropriated

resources of the owners, they have taken control of the company away from its

owners and given it to another party.

The proposed price, from New England Sports Ventures or the other would-be

suitors, was insufficient to give the owners much if any return on their investment.

The alternative – Hicks and Gillett remaining as owners while the club enter a court-

ordered administration – included the risk that key players would see to leave the

club at the next available time in January 2011. The consequences included possible

relegation next season, with lower revenues from television rights, but with the

possibility that the owners could still recover some value at some time in the future.

Whether that would be the case is a business judgement, and opinion on the board

might well have been divided. Even so, the interests of the shareholders were clear:

They had expressed them in no uncertain terms.

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The case raises legal questions concerning the boundaries of property rights and the

nature of the contracts under which the chairman and the managing director joined

the board. The board no doubt took legal advice before acting against the instruction

of the owners, but before that was needed they faced what was essentially a

question of ethics in corporate governance. Narrow self-interest, ethical egoism,

seemed not to play a role in the board's decision. A threat of litigation hung over the

case, and the board members who voted against the owners had little personally to

gain other than the peace and freedom of leaving the board with the job of selling it

done. They may have calculated, more or perhaps rather less formally, the utility of

the transaction, but clearly the owners' perception of utility was very different. And if

the board's fiduciary duty is to the owners, then a legal interpretation of utility would

have led the board to a different conclusion. This was not, then, a simple, utilitarian

view based on shareholder value.

A stakeholder analysis suggests a different interpretation of the rationale for the

board's decision. The chairman and managing director were both avowed supporters

of the club. Much of the interest among news organizations and reporting on the

club's website focused on fan reaction. New management would end the boardroom

feuding and let the players concentrate on on-the-pitch performance. Fewer players

would demand to have their contracts sold to other clubs in the next transfer period in

January. New owners would proceed with rebuilding the stadium to increase its

capacity and create improved amenities for fans. Most importantly, new owners

would give the club a fighting chance to revive its performance enough to escape

relegation, a humiliation that fans could scarcely contemplate. Moreover, as a sports

enterprise, Liverpool FC has commitments to its competitors. Unlike a normal

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business, the presence of competitors is fundamental to the product. Horizontal

growth by acquisition has no meaning. And the nature of competition-as-product

gives a requirement from greater regulatory intervention and an ethical obligation

towards other clubs. Football league rules are set to facilitate the failure of clubs,

though the demise or even just the demotion of one of the biggest clubs would cause

both financial and reputational damage to others. This alters the stakeholder map,

making competitor claims more salient (Agle, Mitchell, & Sonnenfeld, 1999) and

justifying a level of regulation that further constrains the action of managers and

owners and the discretion that boards have in choosing a course of action.

But was this an invocation of stakeholder rights over shareholder rights? Was this a

decision based on a sense of duty to a larger purpose? As the case reached its

conclusion, Broughton spoke of his allegiance to the fans and the club's "wonderful

history, a wonderful tradition", adding:

"I said 'keep the faith'. I had the faith. I was quite clear in my mind that we

were doing the right thing, and I was quite clear that justice was on our

side and that we would work our way through it…. I want to thank the fans

as well. This has been as stressful for them as it has been for us. I fully

sympathise with their anxieties and the nerve-wracking nature of that. I

thank them for keeping the faith" (Eaton, 2010b).

This statement, cast in moral and even religious language, suggests that the board

held, at least to an extent, to a notion of duty from the perspective of stakeholder

theory, and that a deontological rather than strictly utilitarian view led to the board's

decision to cast shareholder value to the side. Yet both anecdotal evidence from

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executives in other enterprises and the academic literature on corporate governance

and social responsibility (e.g. Barnea & Rubin, 2010; Hawkins, 2006; Lea, 2004)

have many examples of considerable scepticism of directors towards any notion of a

priori rights of stakeholders.

"Keeping the faith" involved another set of stakeholders, without whom the enterprise

would fail: the players, supported by owners who would take an approach seeking

the common good, the good of the fans. Broughton's interview continued:

"We have had an incredible team and they've all done a great job…. We

have owners now who understand about winning, are dedicated to

winning, have put the club on a sound financial footing, are willing to back

the club to get back to being one of the, preferably THE, top teams….

NESV bring the passion, the experience, the understanding of sport and

the passion of fans and the need to think about how the fans as

stakeholders fit into the whole thing. It is a business but it's not just a

business and they understand that the emotional side of the fans and

that's what sets them apart" (Eaton, 2010b).

"It's a business but not just a business": In this case, we see a determination by the

board in which stakeholder interests, in particular those of the fans but also those of

players, took priority over shareholder interests. In this way, the role of the board

emerges not as the monitor for shareholders but as a mediating hierarchy (Blair &

Stout, 1999) to settle competing claims. That is, however, only one part of the board's

calculus.

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The consequences of a decision in favour of the owners' interest would have

damaged, perhaps very badly, the business of the football club. The fact that a

perceived duty to fans coincided with one utilitarian judgement (strategic value) at

odds with another (shareholder value) gives the decision of the board greater

impetus to decide against the interest of the owners and against shareholder value.

What remained for the courts to decide were the narrow legal matters of property

rights and contract, not the moral principles that underpin the board's decision. In the

face of ambiguity, the board adopted a pragmatic approach, suggesting that

pragmatic decisions arise more easily when consequential and deontological

interpretations of what is right coincide, even if they coincide imperfectly. In this case,

one version of utility trumped another. In different circumstances, a different

interpretation might arise from the same set of considerations.

Conclusions

This case differs from the mainstream corporate governance literature in several

ways that may limit applicability of its conclusions. It involves a private company, not

a modern public corporation of the type described in the seminal works on corporate

governance and agency theory (Berle & Means, 1932/1991; Jensen & Meckling,

1976). Unlike other private companies, it is one unusually in the public eye. These

observations must, therefore, remain very tentative. To generalize would require

research that goes beyond an inquiry into one decision by one board of one company

operating under one country's law and regulation.

The picture that emerges is one of a contest between differing goods and rights that

illustrate the value and shortcomings of taking a strong view of stakeholder theory,

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with its roots in duty ethics, and those of shareholder theory, with its basis in a

narrow view of utility. This special case shows that appeals to shareholder value

involve appeal to a different special case, that of the public company with dispersed

shareholders, where that narrow view of utility often approximates the wider view of

the strategic value of the business.

In this case, deontological and utilitarian views differ on what is right; but when

aspects of those views approximate each other the door opens for a pragmatic

choice. In public companies these views are blurred by the uncertainties over

whether the concept of shareholder value pertains to current shareholders, future

shareholders or market participants as a whole. Those uncertainties give boards

latitude to justify decisions to themselves without having to choose between utility

and duty when rejecting at least a narrow definition of shareholder value. The

analysis suggests further that the term shareholder value can be used as a substitute

for strategic value when needed to resolve an ethical dilemma and used with a

different meaning when discussing specific decisions with special shareholders.

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